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MFS Africa: Investing in Africa’s fintech sector

November 22, 2018 • Finance, Top Stories

 

MFS Africa: Investing in Africa's fintech sector

Founder and CEO of MFS Africa, Dare Okoudjou.

MFS Africa, a pan-African fintech company connects mobile money systems to each other and to money transfer organisations, banks and other financial institutions, enabling money remittances to and from mobile money accounts. The fintech company enables Africans to send money to mobile wallets across the continent. MFS Africa covers 170 million mobile money recipients across all major networks.

Recently, the Pan-African fintech company announced its second close of Series B funding round. The round, led by LUN Partners Group, a Shanghai-based global investment management group, also includes existing shareholder Goodwell Investments joining LUN Partners Group in investing additional capital into MFS Africa.

IT News Africa spoke to founder and CEO of MFS Africa, Dare Okoudjou, about the MFS Africa story as well as the recent Series B funding round.

1. Who is Dare Okoudjou and what inspires you?
I am the founder and CEO of MFS Africa – a Pan-African fintech company with the largest digital payments network on the continent. Prior to the founding of MFS Africa, I was at the MTN Group where I developed and rolled out their mobile payment strategy in 21 countries across Africa and the Middle East. Having been on both sides of the remittance experience, I understand the frustrations in the process and the urgency to meet the needs of un- and underbanked clients through moible money. Fundamentally, for financial systems to work, there needs to be utility so that consumers can pay anyone, anywhere and in exactly the same way. There also needs to be scale to provide the reach that consumers in an increasingly global world, need.

I started MFS Africa because I realised that there was a big problem that needed to be solved within mobile money: interoperability. We decided to solve this problem by connecting mobile wallets in Africa to our MFS Hub – allowing service providers to facilitate transactions across networks, borders, and currencies through a single API that ensures compliance with all necessary regulations.

2. How has closing the Series B funding round impacted the company?
Closing the Series B round has validated our achievements to date and allowed us to focus on the next big steps in our journey – bringing our platform and services fully to scale. Today MFS Africa connects over 85% of the African mobile money market and while we are already executing on our plans to continue to grow on the continent and increase our coverage, we also have our eye on expansion into other regions. Our most well-established use case is cross-border person-to-person payment – which is already disrupting the inefficient, fragmented, and expensive intra-Africa remittance market. The financing will help us develop additional use cases to bring value to our partners, and will enable us to extend our geographic footprint and our service offering.

3. How does the rise of fintech companies drive economic growth in Africa?
According to recent data from FSD Africa, it’s expected that by 2022, the fintech sector’s contribution to Sub-Saharan Africa’s economic output will increase by at least USD $40 billion to USD $150 billion. In addition to driving access to basic services that provide real value to users, such as payments, remittances, savings, and credit; growth in fintech is also creating opportunity for employment and businesses across the value chain. Consumer finance gets a lot of attention in studies around mobile money, but we’re also equally excited about the impact of fintech on SME trade and finance – we see small businesses and traders taking advantage of the security, convenience, and speed of mobile money as an alternative to risky cash payments or cumbersome, slow, and often expensive bank transfers.

4. What kind of opportunities does financial inclusion through mobile money bring to Africa?
Africa’s payment landscape is shaped by low access to financial services, high mobile phone penetration, and an overwhelming reliance on cash as a payment and transaction vehicle. The prevalence and progress of mobile money is an opportunity for a wider suite of financial services products because it is relevant to, and interlinked with, Africa’s population growth and movement trends. Along with the growth of mobile money transfer, we are seeing an increase in the digitisation of financial services to include bulk disbursements, remote merchant payments and growth in cross-border trade and remittances. Interoperability is critical to achieving scale in any financial service that aims to reach consumers through mobile wallets.

5. What are some of the challenges that you have come across?
The biggest challenge and barrier to markets is the variation and restrictiveness in mobile payments regulations. There is currently a big gap between the ways in which regulators view and apply the principles of proportionality to domestic payments on mobile money systems, and how they view the same monetary value when it happens to cross a border. We work with our mobile network partners to seek regulatory approval for the services we enable, explaining MFS Africa’s technology, compliance function, and key processes. We also engage with regulators to emphasize the power of mobile money to promote financial inclusion while enhancing transparency and traceability, by moving transactions into formal, digital channels.

6. What plans do you have in place to make MFS Africa the company of choice?
First and foremost, we plan to continue to delight our customers with seamless operations and speedy execution. Second, continue to grow the network and offer more payout options for our partners and their end users. Third, we will continue to develop new, relevant use cases to offer a more robust and complete services suite. Finally, we are undertaking an aggressive recruitment drive for more specialised skills as we grow the business. We aim to be both a client-partner and employer of choice across the regions and markets where we operate.

7. How have remittances helped open up the fintech sector?
Remittances are a great entry point for fintech in Africa in particular, because the service is at once in high demand, very familiar to end users, and best served through technology. From the consumer side, it’s a service with strong uptake because it’s a dramatically underserved need – intra-African remittances are among the most expensive in the world, so users are eager for a better solution. Mobile money is an ideal channel for remittances, bringing down costs and enhancing security, privacy, and convenience. Further, remittances bring injections of funds into mobile money ecosystems, and having funds already in their wallets encourages recipients to make more digital payments, keeping more money in the system.

Critically for our business in particular, cross-border remittances are an ideal case for payment gateways and aggregators, as the hub model is much more efficient than a proliferation of point-to-point connections. The development of the hub space has, in turn, opened up possibilities for fintech players wishing to connect to multiple mobile wallet systems through a single integration.

By Fundisiwe Maseko
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